Senate Majority Leader Harry Reid led colleagues and the White House to believe he supported a bipartisan jobs bill — only to scuttle the plan as soon as it was released Thursday over concerns it could be used to batter Democratic incumbents, according to Senate sources.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and Sen. Charles Grassley (R-Iowa) worked for weeks with Reid's blessing and frequent involvement to craft an $85 billion jobs bill, a measure that seemed destined to break the partisan logjam that has ground the Senate to a halt.

But as Baucus, Grassley and President Barack Obama were preparing to celebrate a rare moment of bipartisan Kumbaya on Thursday, Reid stunned a meeting of Senate Democrats by announcing he was scrapping Baucus-Grassley, replacing it with a much cheaper, more narrowly crafted, $15 billion version.

"Grassley and three to four Republicans would have voted for it, but all the other Republicans would have beaten the living s—t out of us [during the 2010 midterms], claiming the bill was too bloated," said a Democrat who supported Reid's decision, explaining the leader's logic.

Few felt as good about the decision: Republicans say the about-face will only add to an already poisonous partisan atmosphere, liberal Democrats think the bill is too small to do much good and the powerful negotiators of the bipartisan package were left embarrassed, demoralized and befuddled.

Aides to Baucus and Grassley said their bosses didn't know of Reid's decision when they unveiled their bill early Thursday – and expected it to have the leader's support.

"Sen. Reid's announcement sends a message that he wants to go partisan and blame Republicans," Grassley spokesperson Jill Kozeny said in a statement.

Antonia Ferrier, a spokeswoman for Sen. Orrin Hatch (R-Utah), who supported the bipartisan effort, said her boss was “deeply disappointed that the majority leader has abandoned a genuine bipartisan compromise only hours after it was unveiled in favor of business-as-usual, partisan gamesmanship.”

The White House also appeared to be caught off guard.

Moments before Reid announced his decision, White House press secretary Robert Gibbs released a statement, saying, "The draft bill released today by Sens. Baucus and Grassley includes several of the president's top priorities for job creation. [T]he president is hopeful that the draft language presented today will lead to a bipartisan Senate bill."

An unapologetic Reid told reporters Thursday that he'd made his decision before walking into the Democrats' Thursday lunch at the Capitol — a lunch that began just as the White House sent out Gibbs’s message.

"I made the decision before I came to the caucus," Reid said. "I just wanted to make sure that [members of the caucus] were supportive of what I was doing, and they are very supportive."

Reid spokesman Jim Manley later said that Reid had decided Thursday morning to push his package and had entered the lunch meeting with the intention of offering those gathered a choice between Baucus-Grassley and his own stripped-down bill.

"In the end, this is the direction the caucus decided to go," said Manley, who emphasized that many of the elements stripped from the bipartisan measure will be appended to later bills.

But people who were in the room painted a somewhat different picture, saying Reid's proposal was met with a mixture of confusion and outrage from senators upset about having their pet projects redacted – even after Reid promised to include their proposals in subsequent jobs bills.

California Democratic Sen. Dianne Feinstein said she'd like more provisions increasing lending to small business and fewer tax cuts. And Iowa Democratic Sen. Tom Harkin argued passionately that, if lawmakers plan to extend corporate tax breaks, they should also extend employment insurance.

"[Reid's] trying to keep it simple," Harkin said emerging from the meeting, "but what I think ought to be in the package is unemployment insurance for one year."

And Baucus seemed puzzled by the change in course, particularly Reid’s decision to drop a package of tax extenders from the bill – a piece with strong bipartisan backing.

"Every senator has a different idea," said Baucus, emerging from the meeting. "There's been no decisions made."

But aides said that Reid was tired of constant lobbying from Democrats who wanted a bigger package and a long list of specific provisions included in the bill. Reid complained that the various requests had "watered down" the Democrats' job-creation message and wanted to present voters with a more streamlined bill.
Staffers added that the Nevada Democrat, fighting an uphill reelection battle, was frustrated that Republicans leaders, led by Minority Leader Mitch McConnell (R-Ky.), weren't fully committed to the bill.

In what appeared to be an attempt to isolate the majority leader, McConnell pushed to offer the Baucus-Grassley plan on the floor Thursday night, saying it would allow the Senate to work on unemployment insurance -- something left out of Reid's plan.

Aides involved in the negotiations say that Republicans in leadership and on Baucus's Finance Committee emerged from a meeting Tuesday saying they were close to agreement on the Baucus-Grassley bill -and that McConnell just needed to brief his caucus before signing on, a process slowed by a week of crippling snow storms.

"They came out and said we are in a good place we are just making sure we are talking to people," said a Republican aide. "All sides wouldn't have worked this long and this hard on this unless they were committed to making this happen."